The Advertising Association of Thailand (AAT) has elected Dentsu,
Young & Rubicam co-chairman Parames Rachjaibun as its new president for
the next two years.
He said his first order of business was to establish a self-regulating
body that would set rates and industry standards.
"Right now, we have serious issues regarding agency compensation," he
said.
"Global media specialists have come in and introduced new payment
methods, so we need to update and prepare members for changes to
come."
According to Mr Parames, the AAT needs to walk a fine line between
helping smaller member agencies survive in this new business
environment, while discouraging rampant under-cutting in Thailand.
Local agencies need to learn more about financial management to regulate
costs and set reasonable fees that are fair both to agencies and
clients.
"Members need to better understand their own costs. Most international
agencies prefer to go with fee-based rates, but local agencies still
prefer the pre-crisis commission rate of 17.65 per cent," he said.
In reality, however, the figure is much lower, and smaller companies
were engaged in cut-throat pricing that could damage the industry.
Mr Parames said given the current cost structure, agencies could not
reduce fees below 12 to 13 per cent; yet some agencies have cut rates
below the critical 10 per cent ceiling.
The AAT intends to draft a code of conduct with guidelines on rates
before the end of the year.
Mr Parames admitted that policing Thailand's advertising industry was
tricky work.
"In the past, we have just been a paper tiger without real authority,"
he said.
"The best the AAT can do is reprimand an offender or complain to the
company in question.
"Sometimes it worked and sometimes it didn't, but we have to be firm
with all members."
The AAT currently has 100 active members, whose total billings
represents 75 per cent of industry turnover.
A membership drive will also be launched to encourage agencies outside
the association to join.
Mr Parames said the AAT had to act quickly before the Thai government
implements a new constitution with articles governing the broadcast and
media industries.
"If we don't have an established code of conduct, the government will
step in and create one for us, and that would be a disaster," he
said.
During his two-year tenure, Mr Parames intends to standardise training
programmes for future generations of advertising executives entering the
industry.
Even with the current surge in business, there was no shortage of
manpower like in Hong Kong or Singapore because two to three thousand
graduates enter the Thai job market annually.
The AAT will also encourage local agencies to work with clients to
create brand communication strategies and not just act as suppliers of
advertising campaigns.
A sub-committee chaired by BBDO advisory chairman Vinij Surapongchai has
been established to research the issue.
